2014 was a year to remember for the Global Technology Platform, Uber. From a continued period of massive growth, both in terms of locations served and total users, to astronomical valuations, the company consistently turned heads. Uber also has its fair share of growing pains: multiple regulatory violations, amongst topics far more serious.
It’s without question that some of these recent headwinds will continue to try and slow the Uber steamboat on its way to pave a global logistics grid. What’s more intriguing is parsing out some of the “experiments” Uber has tested in 2014 and predict where new viable business models will prevail in 2015.
This post examines some of the tests Uber ran in 2014 and logical expansion of those tests in 2015. Uber’s valuation doesn’t solely come from ride sharing. They truly are aiming to become a global technology platform with multiple lines of business. Here’s how they very well might succeed.
By the end of 2014, Uber has set up operation in north of 250 cities across 50 countries with diverse economic backgrounds: 6x growth from the year prior. The top 30 cities, by population, in 2015 are expected to total more than 480 million people or 6.7% of the world’s population. Uber operates in 83% of these cities.
Those 30 cities cut across every continent except Antarctica and Australia. Now those 30 cities are but a subset of Uber’s vision but they can act as a petri dish to test new business models.
The theme of 2014 was expansion: swift, aggressive expansion. This will certainly be a theme in 2015 but not the most exciting one. The company made headlines trialing various forms of delivery strategies from UberEssentials to UberRUSH. The swift aggressive expansion from city to city is laying the groundwork for deeper business model experimentation in 2015. This is where the $40 billion valuations really comes to life.
2015 “Business Experiments”
Below are a list of plausible business models that Uber could pursue in 2015, based off of geographic expansion or existing business viability.
Growth in Asia
In mid-December 2014, Uber announced a strategic partnership with the Chinese web services company, Baidu. This comes roughly a year after another Chinese conglomerate, Alibaba Group, invested north of $200 million in logistics company ShopRunner in the U.S. and spearheaded a $16 billion plan to bolster China’s logistics network to help provide 24 hour online delivery across China.
It’s clear that efficient logistics networks in China will be paramount with a continuing urbanization trend and push in ecommerce. One doesn’t have to look past the explosive growth of Alibaba’s Singles’ Day each year to justify the trend. Several of these plans will take years to build, however.
Look for Uber to be a near-term fix, offering fast delivery for a myriad of items across major Chinese metros through China’s biggest search engine: Baidu. This might very well be Uber’s fastest growing market in 2015.
Uber wasn’t spending December solely cozying up to Asian markets: the company also inked a deal with Carlos Slim’s America Movil to help facilitate the growth of the app through America Movil on select Android phones. This partnership initially targets Mexico but look for major Latin American hubs to pick up on the service in 2015: Sao Paulo, Rio de Janeiro, Buenos Aires, Santiago, Bogota and more.
Some of these regions are relatively underserved by Uber compared with North America & Asia but they are not without promise. New ecommerce players, such as Jumia will help facilitate delivery for thousands of people within Africa markets. Additionally as Uber expands in places such as Cairo, tourism is a viable option to explore as part of urban tours.
To expand on the tourism idea, let’s consider Cairo as a test case. The city and Egypt as a whole once saw tourism levels north of $12 billion annually. Recent and ongoing violence has since cut that number in half with less than 10 million people visiting the popular tourist destination.
The ability to self-navigate a city’s tourist destinations: sites, markets, museums and more could be a novel way for traveler’s looking to explore the wonders of a city but without a tour company. This concept could expand into some of Europe’s famed old cities, giving tourists an immersive and potentially interactive tour guide from a network of Uber drivers.
This all could be made possible with the Uber API. Travel guide mobile applications will continue to evolve. Add in the logical step of connected transportation from those sites makes it very appealing to a set of travelers.
Most regions across the globe have been focused on growth: growth of the network and awareness of the service. Here in the U.S., however, we began seeing adjacent tests such as UberEssentials and UberRUSH. This is just the beginning for these two concepts. Uber has the most extensive logistics network of any of the newer models (Instacart, Deliv, Postmates etc.). While the models are not perfectly aligned, the groundwork will allow Uber to explore this more seriously in 2015.
Look for Uber to test these models in cities such as San Francisco, Chicago, Boston, Los Angeles & Dallas.
Finally, look for the API to be utilized at a much larger scale in 2015. Uber is a network, not only in terms of its ride services but its technology itself. This will help drive business models and charitable endeavors it has begun testing in the past several months.
When you take a minute and consider the business models Uber has open to its future, it becomes truly hard to fathom. We have much to see from the global technology platform in 2015.